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Chemicals and the Economy

Policymakers remain in the Denial phase

A year ago, the blog feared we were “still towards the beginning of the crisis”, not at its end. Sadly, its judgement seems to have been correct. 2 weeks after that post, the US Federal Reserve launched its now infamous $600bn QE2 programme. The aim was to provide further massive stimulus to the global economy. […]

US Fed policy may be going Back to the Future

Today’s 419 point fall on the Dow Jones Average, and $6/bbl fall in WTI crude oil prices, may not be just another example of the wild volatility that has come to seem normal in financial markets. It may also mark the end of an era. Since 1994, the US Federal Reserve has used all its […]

Buffett says US rich should pay higher taxes

Last year, Warren Buffett paid only $7m taxes, just 17.4% of his income. Now he says rich Americans, including himself, should pay more, in order to help reduce US debt. He notes that: • In 1992, the wealthiest 400 Americans paid 29.2% tax on $16.9bn income • In 2008, they paid just 21.5%, on incomes […]

Wal-Mart sends a message

The blog is a great believer in the predictive power of the retail sector. Wal-Mart and Tesco were the first to spot the downturn in the summer of 2007, a year before it became obvious to everyone else. Now Wal-Mart’s problems are providing some important messages about how companies need to adjust their strategies to […]

China’s bank lending nears its Minsky Moment

China’s credit bubble is one of the largest the world has ever seen. This is true not only of its total size, but also in relation to GDP. The history of credit bubbles is very clear about what happens next. Anyone who has followed the US subprime lending disaster will know the script already. But […]

High Frequency Trading dominates as markets crash

The blog was almost alone at the end of April, when it launched the IeC Downturn Alert. Today, its fear that we are close to a global downturn has become mainstream. As the American Chemistry Council report, “fears of another global recession are rising with several noted forecasters raising the chances of another recession to […]

Goldman halves global ethylene growth estimate

Goldman Sachs today halved its estimate for global ethylene growth to ~2.5%, and slashed its earnings estimates for some major US companies. Analyst Robert Koort warns: “Our outlook for earnings growth has decelerated substantially in recent weeks … Our economists now expect US GDP to grow only 1.7% in 2011 and 2.1% in 2012 vs. […]

Chrysler warns of China threat

Chrysler CEO, Sergio Marchionne, has issued a wake-up call to Western auto companies about the growth of China’s exports. He warns that they “can’t count on dramatic growth in Asia to drive prosperity“, and suggests that China’s plans to increase auto exports pose an “enormous” risk. Meanwhile, US auto sales disappointed again in July. As […]

China’s auto market goes ex-growth

China’s auto market has gone ex-growth, as the above chart shows. Monthly sales in July (red square) were the 2nd lowest since July 2010. The problem is the continuing fall-out from the end of China’s great credit bubble. Inflation hit a new high of 6.5% in July. More importantly, food prices rose by 14.8%, up […]

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